Every agreement,—
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights,
is void to that extent.
Exception 1.—Saving of contract to refer to arbitration dispute that may arise.—This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.
Exception 2.—Saving of contract to refer questions that have already arisen.—Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.
Exception 3.—Saving of a guarantee agreement of a bank or a financial institution.—This section shall not render illegal any agreement in writing made by a bank or a financial institution providing for a term in a guarantee for extinction to the rights or discharge of any party thereto from any liability under or in respect of such guarantee at the expiry of a specified period not less than one year from the date of occurring or non-occurring of a specified event.
Legal Commentary & Landmark Judgments: Section 28
Section 28 of the Indian Contract Act, 1872 renders void any agreement restricting a party absolutely from enforcing contractual rights in court, or curtailing statutory limitation periods, safeguarding the constitutional right to judicial remedies.
Commercial contracts stipulating that 'claims must be filed within 30 days of project completion or be barred forever' are void under Section 28; counsel can safely file within the 3-year statutory limitation period despite such clauses.